AG protects gift cards for NYers

Two days before Christmas, New York’s electeds are fighting the good fight against predatory gift card policies.

Attorney General Andrew Cuomo announced that he has obtained a commitment from KB Toys that it will honor gift cards until at least January 11, 2009. KB Toys is going through bankruptcy .

Cuomo employed a Christmas pun in his press release:

“The bankruptcy filings and store closings that have unfortunately decked this holiday season are too often rendering gift cards worthless and taking hard-earned money out of New Yorkers’ pockets,” said Attorney General Cuomo. “I urge all New Yorkers with KB gift cards to take advantage of this welcome agreement, and use the gift cards for their holiday shopping needs this season.”

Full release after the jump.

ATTORNEY GENERAL CUOMO ENSURES NEW YORKERS CAN REDEEM MILLIONS OF DOLLARS IN UNUSED KB TOYS GIFT CARDS AS COMPANY PURSUES BANKRUPTCY

As Toy Company Goes out of Business, Cuomo Secures Agreement with KB to Honor New Yorkers’ Outstanding Gift Cards

NEW YORK, NY (December 23, 2008)-Attorney General Andrew M. Cuomo today announced he has obtained a commitment from KB Toys, a national toy retailer that is in bankruptcy proceedings, to honor New York consumers’ gift cards through the holiday season and the post-New Year shopping period. Under the agreement with the Attorney General, KB will honor gift cards purchased by consumers at least through January 11, 2009.

KB Toys is one of the largest toy retailers in the nation operating primarily out of mall-based stores. The retail chain filed for bankruptcy on December 11, 2008. KB Toys sold as much as $2 million in gift cards this year alone, and currently holds a total of $12 million in unredeemed gift cards. The bankruptcy court authorized, but did not require KB Toys to honor gift cards. The Attorney General stepped in to ensure that New Yorkers who have gift cards purchased from KB Toys will be able to use the cards, as well as any merchandise credit, through the holidays and during the immediate post-holiday period at KB Toys stores. In addition, consumers who have merchandise on lay-away have until December 31st to obtain the merchandise by paying the balance due. KB Toys also committed to notifying the Attorney General and to post signs in stores at least ten days in advance of any decision to stop honoring New Yorkers’ gift cards.

“The bankruptcy filings and store closings that have unfortunately decked this holiday season are too often rendering gift cards worthless and taking hard-earned money out of New Yorkers’ pockets,” said Attorney General Cuomo. “I urge all New Yorkers with KB gift cards to take advantage of this welcome agreement, and use the gift cards for their holiday shopping needs this season.”

This is the second time in four years that the Pittsfield, Massachusetts-based company has filed for bankruptcy. KB Toys operates 53 stores in the state of New York and seven in New York City. The company is preparing to close all of its 461 stores throughout the nation, including its New York stores. The company began going out of business sales on December 19, 2008. The gift cards will be honored at those store sales, but not online.

Consumers have a chance of receiving full or partial reimbursement for any unused funds remaining on their KB Toys gift cards by filing a priority proof of claim in KB Toys’ bankruptcy proceeding. More information on this process is available on the Attorney General’s website. A report documenting the risks associated with gift cards is also available on the Attorney General’s website, which describes many of the hidden traps consumers face when attempting to use their gift cards. Consumers wishing to read these valuable tips should visit http://www.oag.state.ny.us/features/gift_card/pdf/report.pdf.